As retirees transition from accumulation to distribution, their investment priorities shift dramatically. J. Graydon Coghlan of CFG Wealth Management emphasizes that the strategy used to build a retirement nest egg may not serve the same purpose during retirement. While growth was the goal during peak earning years, income, stability, and capital preservation now take center stage.
In the growth phase of an individual’s financial journey, the focus is typically on long-term capital appreciation. This involves investing in equities, high-growth funds, or even riskier assets with the understanding that market volatility can be absorbed over decades. However, in retirement, the time horizon shortens, and the consequences of market downturns become more acute. J. Graydon Coghlan of CFG Wealth Management notes that retirees often struggle with this transition, as it involves a psychological shift as much as a financial one. Instead of aggressively pursuing returns, the goal becomes to secure a sustainable, reliable stream of income that can last 20 or more years, and that often means dialing back on risk and embracing a more conservative allocation.
Retirees must reconsider their risk tolerance in light of their shorter investment time horizons. Graydon Coghlan of CFG Wealth Management advises that portfolios should be structured to absorb less volatility while still delivering reliable returns. This involves rebalancing away from high-risk equities and toward income-generating assets that provide more predictability in cash flow.
Determining the right level of risk requires a deep understanding of both the retiree’s lifestyle goals and their financial needs. Graydon Coghlan points out that while no retiree wants to see their portfolio value plummet during a market correction, being overly conservative can lead to another problem: running out of money too soon. Inflation and unexpected expenses, such as healthcare, can erode the purchasing power of overly safe investments. The challenge, then, is to find that delicate balance where the portfolio can generate enough income without exposing the retiree to undue risk. This is where a nuanced approach to asset allocation becomes crucial. Graydon Coghlan of CFG Wealth Management believes that aligning asset choices with risk appetite and anticipated longevity is at the heart of effective retirement planning.
Fixed income instruments like bonds and dividend-yielding stocks become more attractive as they generate steady income while preserving capital. According to J. Graydon Coghlan, incorporating these investments strategically can safeguard retirees from market fluctuations and provide the financial security they need. Yet, he warns against overconcentration, noting that even traditionally safe assets like government bonds can carry inflationary and interest rate risks.
Many retirees lean heavily on bonds as a cornerstone of their portfolios. While this can be effective, J. Graydon Coghlan of CFG Wealth Management urges investors to be aware of interest rate sensitivity. As interest rates rise, bond values typically fall. Holding a significant percentage of long-term bonds in such an environment can erode capital and income simultaneously. That’s why strategies such as bond ladders, floating rate notes, and short-duration bond funds are gaining popularity. These allow for reinvestment at higher rates and limit exposure to sudden market movements. Additionally, dividend-paying equities can supplement fixed income with the potential for moderate growth, offering a hedge against inflation and helping retirees maintain their standard of living.
Diversification is a pillar of smart retirement planning. Graydon Coghlan suggests that spreading investments across asset classes—including equities, fixed income, real estate, and possibly annuities—can reduce overall portfolio risk. More importantly, a diversified portfolio can maintain a balance between income and modest growth, essential for sustaining wealth throughout retirement.
Graydon Coghlan of CFG Wealth Management cautions that over-diversification, or diversification without strategy, can lead to underperformance. Instead, he promotes purposeful diversification. This means choosing a mix of asset classes that respond differently to economic changes, thereby smoothing portfolio volatility. For example, real estate investment trusts (REITs) can offer income and hedge against inflation, while annuities can provide guaranteed income for life. Meanwhile, maintaining a small portion in equities helps ensure that the portfolio continues to grow modestly to combat the erosive effects of inflation. Graydon Coghlan underscores the importance of constant monitoring and rebalancing to maintain this optimal mix.
One of the main concerns for retirees is ensuring that their income outlasts their lifetime. J. Graydon Coghlan recommends structuring a portfolio that mimics a paycheck, including ladders of bonds or annuities to provide monthly income. This not only instills peace of mind but also helps retirees budget more effectively and avoid panic selling during market downturns.
Creating a reliable income stream requires foresight and discipline. According to J. Graydon Coghlan of CFG Wealth Management, retirees should segment their portfolios into "buckets" that reflect short-term, mid-term, and long-term needs. The short-term bucket may hold cash equivalents or short-term bonds for immediate expenses. The mid-term bucket might include dividend stocks and intermediate bonds, while the long-term portion can remain invested in growth-oriented assets. This approach reduces the need to sell volatile investments during downturns and ensures that income is available regardless of market conditions. Importantly, J. Graydon Coghlan believes in customizing these structures based on the client’s lifestyle, anticipated medical expenses, and longevity expectations.
Inflation and longevity are twin threats to retirement security. Graydon Coghlan of CFG Wealth Management urges retirees to incorporate assets that can hedge against inflation, such as Treasury Inflation-Protected Securities (TIPS) or certain real assets. Additionally, maintaining some equity exposure can help portfolios keep pace with rising costs over time, especially for retirees who may spend 20–30 years in retirement.
In the past, retirees could rely on pensions and fixed returns to sustain their lifestyle. Today, with longer lifespans and fewer defined benefit plans, individuals must become more proactive. Graydon Coghlan warns that ignoring inflation risk can significantly reduce purchasing power over a decade or two. He also notes that underestimating longevity risk can lead to premature depletion of retirement assets. That’s why Graydon Coghlan of CFG Wealth Management recommends blending income generation with inflation protection, ensuring that financial plans are robust enough to adapt to economic changes and personal health trajectories.
There is no one-size-fits-all formula for retirement asset allocation. J. Graydon Coghlan emphasizes that individual circumstances—such as health status, expected longevity, lifestyle preferences, and estate planning goals—must be considered. He advocates for continuous review and adjustment of financial plans to adapt to changing needs and economic conditions.
Customization is the key. J. Graydon Coghlan of CFG Wealth Management works closely with clients to build financial blueprints that are not only mathematically sound but emotionally comfortable. Retirees who fear market exposure too much might benefit from annuities, while those with strong risk tolerance and longevity may prefer a larger equity allocation. Planning also must accommodate family needs, charitable intentions, and unexpected life events. J. Graydon Coghlan insists on regular reviews—quarterly or annually—so that plans evolve alongside market trends and personal developments.
For many retirees, a well-planned legacy is a key objective. Graydon Coghlan of CFG Wealth Management integrates estate planning into the broader asset allocation discussion. Ensuring tax efficiency and aligning investment vehicles with transfer goals can protect wealth for the next generation while still meeting the retiree's lifetime needs.
Graydon Coghlan believes legacy planning is about more than just passing on wealth—it’s about passing on values. Tools like donor-advised funds, charitable remainder trusts, and life insurance can serve multiple purposes, supporting philanthropic causes while providing tax advantages. Graydon Coghlan of CFG Wealth Management also stresses the importance of communication: retirees should discuss their plans with heirs to avoid confusion or conflict. By treating legacy planning as part of the overall asset allocation process, retirees can achieve a balanced approach that honors both personal goals and family harmony.
The evolution from growth to income in retirement is more than a financial adjustment; it’s a shift in mindset. J. Graydon Coghlan of CFG Wealth Management stresses that retirees must stay proactive, informed, and adaptive to new market realities and personal life events. By embracing income-focused, diversified, and flexible strategies, retirees can navigate their golden years with confidence and security.
Whether you’re in the early stages of retirement or well into your later years, building a thoughtful, well-structured income plan can mean the difference between uncertainty and peace of mind for decades to come.
